While quietly recovering from a very pleasant outdoors campfire dinner party under the super sized full moon last night the recollection of a totally insane suggestion made by one of the guests keeps testing the pain threshold on this morning after the night before.
It was that the government’s budget surplus challenge was really easy to solve, if it picked the ‘right big new tax’.
The company fell silent at that point. A new tax! Gulp!
An …. Ansett … ticket … type … levy solution. Even the nearby creek froze silent as those words were uttered.
The slightly wacky, but successful business identity, said (as remembered through the pain barrier) something about a ‘a $100 per sector levy.
‘You can’t tell me $100 more each way is going to stop people flying,’ he said. (Well, I tried to, but it was like trying explain to the well meaning but not worldly why Sydney should continue to have its existing airport, never mind a second one, in preference to having one available at the end of a $100 billion high speed rail line some time after 2040 ….. but I digress.)
In the cold, cloudy light of morning I have looked up the BITRE stats. There are about 55 million domestic trips and 28 million international flights a year in Australia.
So that is 83 million sectors multiplied by $100 which is $8.3 billion a year.
Don’t mock. Something like this has already been done by Her Majesty’s Conservative lead coalition in the UK, and in some of the more humorless parts of the EU.
Even if, as a consequence, low fare bogans and surviving employees of Macquarie Bank sharply reduced their frequent flying habits, such a levy might only raise $4.5 billion a year, and sent an airline and airport or two broke, but according to Access Economics this morning, that is still 75% of the $6 billion Treasurer Swan has to actually cut off real expenditure if he is to convincingly balance the budget, and we know how important ‘headline’ figures rather than details are in matters like this.
Looking back over the achievements of the government, or reviewing the $1 Giga-trillion black hole economics of Joe Hockey, Swan’s more entertaining and personable shadow in matters of politically expedient accounting, neither side of the house would blink if it was pointed out that such a stroke of genius would collapse the tourism and dependent industries sectors to such an extent that it might cost the economy $10 billion in lost economic benefits in its first year.
Which is why I still have this twinge of fear about tomorrow night.